First Gas faces prosecution for Papamoa pipeline purchase

First Gas faces prosecution for Papamoa pipeline purchase

By Gavin Evans

Jan. 10 (BusinessDesk) - Pipeline operator First Gas is being prosecuted for anti-competitive behaviour in its purchase of new pipelines in the Bay of Plenty.

The Commerce Commission has begun proceedings in the High Court related to the firm’s 2016 purchase of 9.5 kilometres of steel and plastic pipelines that Wanganui-based GasNet laid in a new subdivision in Papamoa.

The commission says First Gas, which operates the country’s trunk transmission pipelines and is the third-largest gas distributor after Powerco and Vector, bought the assets without a clearance or authorisation from it.

The commission said the firm also behaved anti-competitively when – having initially been turned down by GasNet – it started laying its own pipelines in the areas where GasNet had installed its assets.

GasNet also contractually restrained the Wanganui-based company from operating in the Bay of Plenty for five years.

BusinessDesk has sought comment from both First Gas and GasNet. GasNet, which is owned by Whanganui District Council, declined to comment, given the matter is before the court. The commission, which says First Gas has filed admissions to the alleged conduct, wouldn’t comment further.

The assets First Gas acquired, including a regulator station, lie inland from Papamoa and are close to the existing First Gas network. The value of the purchase hasn’t been disclosed.

In its 2017 asset management plan, First Gas said it acquired the assets to keep pace with the rapid commercial and housing growth in the area.

“This acquisition is consistent with our desire to give consumers the choice of reticulated natural gas in the areas that we serve,” the New Plymouth-based company said.

“Other initiatives that we have implemented that are consistent with this strategy include offering free household connections - for households within 20 metres of our networks - and not requiring capital contributions from developers in certain circumstances.”

While the proposed purchase had not been included in First Gas’s 2016 asset management plan, the company noted that the Commerce Commission had considered it in its final determination of pricing for the company.

(BusinessDesk)

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